The decision to close EFC Uganda Limited was taken because the Central Bank has determined that the continuation of microfinance institution’s activities is detrimental to the interests of its depositors due to its failure to resolve its significant undercapitalization and poor corporate governance
Bank of Uganda (BoU) has placed EFC Uganda Limited, a microfinance deposit-taking institution, under liquidation, revoked its license, and ordered for the winding up of its affairs in the country.
According to Michael Atingi-Ego, the deputy Bank of Uganda governor, the decision to close EFC Uganda Limited was taken because the Central Bank has determined that the continuation of microfinance institution’s activities is detrimental to the interests of its depositors due to its failure to resolve its significant undercapitalization and poor corporate governance.
“Bank of Uganda and the Deposit Protection Fund of Uganda will inform depositors of the arrangements that will be put in place to enable them to access all of their deposits. All other creditors are requested to submit their claims to the Office of the Director Financial Stability, Bank of Uganda within 30 days from the date of this statement,” he said in a Friday morning statement.
He said all borrowers of EFC Uganda Limited must continue to service their loan obligations by making payments at Bank of Uganda offices and branches.
“Any person possessing property of EFC Uganda Limited should deliver it to Bank of Uganda and hand it over to the Office of the Director, Financial Stability. In accordance with Section 69 of the Act no steps may be taken by any person to enforce any security over the property of EFC Uganda Limited (MDI) and no other proceedings or execution of legal process may be commenced or continued against the institution or its property. All inquiries should be addressed to Bank of Uganda,” the BoU deputy governor added.
EFC Uganda Limited (EFCUL), also known as EFC Uganda, is a microfinance deposit-taking institution (MDI) which has been lending primarily to small enterprises.
The institution opened in Uganda in June 2012 as Entrepreneurs Financial Center Limited, with one branch in Ndeeba in the Lubaga Division of Kampala. In November 2014, EFCUL was awarded an MDI banking license by the Bank of Uganda, adopting the name EFC Uganda Limited. As of December 2021, EFCUL boasted of assets worth Shs112.8 billion, with shareholders’ equity of Shs12.982 billion. At that time, the institution employed 136 staff.
The institution’s shareholders according to their website, include Développement international Desjardins (DID), which is a subsidiary of Desjardins Group (the leading financial cooperative group in Canada and sixth largest in the world), AfricInvest Financial Sector Limited (AFS), the Belgian Investment Company for Developing Countries (BIO), and Uganda Gatsby Trust.
“EFC Uganda is driven by its mission of offering financial services to MSMEs on a permanent and sustainable basis while contributing to wealth creation and poverty reduction,” reads a statement on their website.